Thousands of fraud victims tricked into handing over their life savings could now get their money back following a landmark watchdog ruling.

In a major victory for Money Mail’s Stop the Bank Scammers campaign, the Financial Ombudsman has ordered Santander to refund a customer who lost £12,000.

The ruling could open the floodgates for claims from many other fraud victims who have struggled to get any of their money back.

In the Santander case, the victim thought he was speaking to the bank’s fraud department and unwittingly gave criminals the information they needed to transfer money out of his account.

Thousands of fraud victims tricked into handing over their life savings could now get their money back following a landmark watchdog ruling

Banks typically refuse to refund scam victims in these instances on the grounds they authorised the payment or were negligent with their banking details – even if they had no idea they were speaking to fraudsters.

But in this case, the Ombudsman said the customer was ‘a victim of a sophisticated scam with social engineering at the very heart of it’ and had not authorised the transaction or acted with gross negligence.

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In the Santander case, the victim thought he was speaking to the bank’s fraud department

Fraud expert Richard Emery, of consultancy 4Keys International, said: ‘This is a huge step forward. The Ombudsman now recognises fraudsters are far more sophisticated than in the past. The bar has been set at a higher level and, if a bank refuses to refund victims, it will have to prove they have been truly negligent.’

He added: ‘The chances of the Ombudsman taking the bank’s side now are very slim.’

The decision means that fraud victims who have recently been refused a refund by their bank on the grounds they were grossly negligent could resubmit a complaint to their bank. The bank may then agree to have another look at the complaint and, if not, the customer could escalate it to the Ombudsman. Customers could also ask the Ombudsman to reopen their case if they have not yet received a final decision.

Top officer says: Give conmen longer in jail

Fraudsters who steal thousands of pounds from vulnerable people should face tougher punishments because sentences are too short to deter them, one of Britain’s top detectives has said.

Mick Gallagher, head of Scotland Yard’s organised crime command, said courts are failing to take account of the horrendous impact on cyber-crime victims.

‘There are lots of victims and some of the smaller businesses subject to fraud will go bust,’ he said. ‘People end up with depression, people end up suicidal, older people who have had their pensions milked – there is huge human cost.’

Detective Chief Superintendent Gallagher pointed out that a bank robber can be jailed for life, but the maximum sentence for an online fraudster who steals from bank customers is ten years.

Asked whether legislators need to take a different attitude to fraud, he said: ‘Yes, we could look at sentencing, because the sums of money these people are making are vast.’

He spoke out after a Daily Mail campaign highlighted the scale of online fraud, with £1million a day lost to bank transfer scams.

Customers have six years to complain to their bank about a disputed unauthorised transaction. When banks reject a complaint, customers have six months to go to the Ombudsman.

Caroline Wayman, chief executive of the Financial Ombudsman Service, said: ‘Each year, we see more than 8,000 cases involving fraud and scams.

‘It’s not fair to automatically call a customer grossly negligent simply because they’ve fallen for a scam. That’s especially true in light of the sophisticated way criminals exploit banks’ security systems – and convince customers that their money is at risk.’

Gareth Shaw, from consumer group Which?, said: ‘It’s good to see this decision from the Ombudsman, which makes it clear banks should reimburse victims who lose money through no fault of their own.’ But not all victims will benefit from the Financial Ombudsman’s new approach to ruling on fraud cases.

For example, the ruling would not apply if someone was tricked into transferring money into a fraudster’s account for a car that later turned out not to exist or convinced to make a payment to a bogus solicitor when buying a house. This is because they transferred the money themselves, which is known as authorised push payment fraud. About £145million was lost to this type of fraud in the first six months of last year – up 50 per cent on the same period in 2017.

However, a new code of conduct is expected to be introduced soon to ensure all victims will be treated fairly and compensated. The Payment Systems Regulator said it is still being finalised.

A spokesman for Santander said: ‘Santander has the deepest sympathy for customers who fall victims to scams. We acknowledge the new approach being taken by the Financial Ombudsman and have resolved this case in line with the decision. We will continue to work closely with the Ombudsman as this evolves.’

I recovered £6k savings scammers stole from me

Naika Butler lost £6,125 to scammers last summer.

The 33-year-old childminder had received a text seemingly from NatWest about a potentially fraudulent £300 payment to Argos from her account. The text included a phone number for the bank’s fraud team.

When she phoned, a man called ‘Jeremy’ said he would sent a code to her mobile which she would need to read out. This would enable him to transfer the money to a new, safe account, he said.

Naika Butler, 33, from Wickham, south east London, who lost £6,125 in savings

When Miss Butler, a mother-of-three, from West Wickham, south-east London, visited her local branch the next week she found her savings were missing. The fraudster had also increased her overdraft to £8,000 and taken out a loan of £9,000, putting her in £17,000 of debt.

After pressure from the Mail, NatWest agreed to write off the overdraft and loan. But it refused to refund her savings, claiming she had authorised the transaction.

But after Money Mail contacted the bank yesterday to inform it of the Ombudsman’s latest ruling, it agreed to pay back all the money. Mrs Butler said: ‘To be told I am now getting a refund is fantastic.’

A NatWest spokesman said: ‘We wish to apologise for the distress caused to her while we reached this decision.’

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Fraud victims tricked into handing over their life savings could now get their money back